Michigan Lawmakers Propose Bitcoin Pensions, CBDC Ban and Green Mining

The proposed legislation, introduced by a mix of Republican and Democratic lawmakers in the Michigan House of Representatives, reflects the state’s intention to engage with the growing influence of digital finance while setting clear boundaries on federal intervention.

One of the most high-profile proposals, House Bill 4510, would authorize the Michigan Department of Treasury to allocate a portion of the state’s public pension fund into cryptocurrencies, primarily Bitcoin and Ethereum. The bill, introduced by Representative Bill Schuette (R-Midland), amends the Public Employee Retirement System Investment Act to allow such investments, but only through regulated exchange-traded products (ETPs) issued by registered investment companies.

The bill mandates that eligible cryptocurrencies must have an average market capitalization exceeding $250 million over the past 12 months, currently a threshold met by only Bitcoin and Ethereum. The move is framed as a diversification strategy intended to help public retirement portfolios capitalize on the long-term growth of blockchain-based assets, while mitigating risk through structured financial products.

While embracing decentralized digital assets, Michigan’s legislature is also drawing a sharp line against centralized digital money issued by the U.S. federal government. House Bill 4511, sponsored by Representative Bryan Posthumus (R-Cannon Twp.), seeks to ban all state agencies and departments from assisting in the rollout, testing, or support of a U.S. CBDC.

The bill’s language positions it as a defense of financial privacy and a repudiation of centralized financial surveillance. It also stipulates protections for digital asset users and businesses, preventing the imposition of additional state-level taxes or constraints on the use of lawful cryptocurrencies.

The move aligns Michigan with a growing list of states expressing skepticism about CBDCs, including Florida, Louisiana, and Texas, which have introduced or passed similar prohibitions. Critics of CBDCs argue that they could be used by the federal government to monitor or restrict individual financial activity, a concern echoed by Posthumus during legislative hearings.

In a more unconventional proposal, House Bill 4512 seeks to pair cryptocurrency innovation with environmental remediation. Introduced by Democratic Representative Mike McFall and supported by a bipartisan coalition, the bill would launch a pilot program to establish Bitcoin mining operations at abandoned oil and gas wells across Michigan.

The initiative is intended to turn environmentally hazardous sites into productive economic zones. To qualify, mining operators would need to submit detailed business plans outlining their organizational structure, operational costs, energy use, and expected profitability. The bill emphasizes that only sustainable, energy-efficient mining models will be approved.

To complement the environmental mining bill, House Bill 4513 proposes changes to Michigan’s income tax laws. Specifically, it seeks to formalize how income generated through the proposed state mining program is classified and taxed. The bill offers guidelines for reporting earnings, deductible expenses, and capital gains related to crypto mining, providing clarity for both businesses and individual participants.

While still under discussion, some lawmakers have hinted at potential future amendments that may include tax breaks or incentives for mining operators who utilize renewable energy sources.

Michigan’s crypto legislative package places it among a growing group of U.S. states actively experimenting with digital asset frameworks. Over 20 states have introduced similar proposals, ranging from Bitcoin treasury bills to blockchain-friendly tax codes. However, few have bundled their efforts as comprehensively as Michigan now has.

By addressing investments, digital sovereignty, environmental impact, and tax regulation in one legislative push, Michigan may set a new precedent for state-level crypto governance. Analysts note that these developments could attract blockchain startups, mining firms, and fintech innovators to Michigan, especially if the state positions itself as a regulatory sandbox.

All four bills are currently in committee review and are expected to face intense debate in the weeks ahead. Lawmakers will need to reconcile innovation with caution, particularly on issues like fiduciary duty in pension investments and the environmental impact of crypto mining. Public hearings are likely to draw testimony from industry leaders, labor unions, environmentalists, and civil liberties advocates.

For now, Michigan appears poised to enter the digital asset arena with a blend of ambition and regulation. Whether these proposals become law or spark revisions, they underscore the state’s growing role in shaping America’s decentralized financial future.